Case Law Details
Shri Duraisamy Shanmugasundaram Vs ITO (ITAT Chennai)
As per assessee’s submissions, the money deposited in NRE account was withdrawn by assessee’s parents in India. The same has been sourced to deposit the same in another NRO account from time to time. However, rejecting assessee’s explanation, Ld. AO held that the cash was not re-deposited within a reasonable time frame. Accordingly, Ld. AO worked out peak credit of Rs.15.08 Lacs and added the same to the income of the assessee.
During appellate proceedings, it was submitted that the assessee do not have any taxable income in India and the withdrawals were the only source of cash deposit. However, Ld. CIT(A) merely endorsed the view of Ld. AO against which the assessee is in further appeal before ITAT.
ITAT find that the assessee is a NRI and living in USA for past more than 20 years. The income of the assessee is not subjected to tax in India and accordingly, he has not filed any return of income. This fact has not been appreciated by Ld. AO since Ld. AO has treated the assessee as resident only. The assessee is maintaining NRE account as well as NRO account at Erode to remit foreign savings. The assessee, apparently, has no source of income in India. Therefore, the reasoning of Ld. AO that the deposits are not within reasonable time frame could not be accepted. In fact, Ld. AO has admitted correlation between these two accounts and added only peak credit to assessee’s income. On this fact alone, the impugned addition is not sustainable and presumption would arise in assessee’s favor that the only source which could be used to make deposits would be assessee’s NRE account only and nothing else. Therefore, delete the impugned addition.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
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